How Silicon Valley can lose the ’embarrassing’ frat boy image and get its act together

How Silicon Valley can lose the ’embarrassing’ frat boy image and get its act together

Editor’s note: This commentary on how Silicon Valley’s tech community can change its culture was originally published on CNBC.com in October 2017.

Microchips, disk drives, routers, the iPhone. Google, Facebook, Netflix, Airbnb. These are just some of the innovations and innovators rooted in Silicon Valley, a place where disruption is the rule.

If only all those big brains could figure out a way to stop Silicon Valley’s persistent sexism problem.

It’s ironic, disgusting and perplexing that Silicon Valley is home to a company smart enough to almost single-handedly launch the on-demand economy – aka the Uber Effect – while also dumb enough to allow a frat house culture that led to CEO Travis Kalanick stepping down in the wake of widespread allegations of sexism and sexual harassment.

Or the place where SoFi CEO Mike Cagney stepped down following claims of sexual harassment; Binary Capital partner Justin Caldbeck took an indefinite leave of absence after six women accused him of hitting on them while they were pitching him for potential investment; and where Google engineer James Damore was fired after circulating a memo that asserted women are less biologically inclined to work in tech-related fields.

And all of this was in 2017 alone. Things have gotten so out of hand that California State Sen. Hannah-Beth Jackson in August introduced a bill that would add investors to a list of people – attorneys, landlords, teachers, physicians and other professionals – already prohibited from sexually harassing someone they work with.

The time is overdue for Silicon Valley’s power-brokers to step up and apply their transformational energies to solving the embarrassing issues that have been plaguing the tech sector.

Our tech industry has never been a fan of slow, evolutionary change. It shakes up the status quo. It takes risks. It embraces bold moves. And that is how it needs to act now in attacking the rampant sexism that has been making headlines around the world.

The first step in fixing this must be for the industry to admit it has a problem. Let’s be honest: For years, frat house culture and tech-bro behavior wasn’t just allowed in Silicon Valley but encouraged.

And then Silicon Valley leaders must take daring, decisive action to bring real change: Venture capital firms, boards and C-suites should set a goal of a 50-50 ratio between men and women, and work aggressively toward it.

People often compare the current male-dominated culture in Silicon Valley to the Wall Street boys clubs of the ’80s and ’90s. But it’s more than just an analogy. There’s a vicious cycle at work.

The finance world of today is still heavily male-dominated, and it often rewards a certain type of behavior over real qualifications. That finance world meets up with Silicon Valley through limited partnerships that fund venture capitalists. The VCs they fund are predominantly male. The founders the VCs fund are then mostly male. The VCs and the founders then create male-dominated boards (typically consisting of the VCs and the founders). The board and founders then hire management teams that, you guessed it, are largely male. From the management teams it then trickles down into the employee base.

The main reason cited for the lack of diversity at these senior positions is the mostly male “candidate pipeline.” I’ve been susceptible to this argument in the past as well, and I was wrong.

The reality is that there are more highly qualified female candidates than the male-dominated culture acknowledges. Plain and simple, too many women are being passed over.

VCs in particular need to end the chicken-and-egg game where they claim to aggressively look for women to bring in as partners but claim they can’t find enough women who have a proven track record for investing. Jenny Lefcourt, a partner at Freestyle Capital, writes convincingly that VCs are missing out on great talent and that it will soon become a disadvantage for any firm to not have a woman.

A move to a 50/50 model is not only the right thing to do, but it actually would be good for the business. Studies by McKinsey, Catalyst, Harvard Business Review, and others have shown that diverse management teams and diverse boards outperform their peers.

If 50/50 sounds overly ambitious, it’s been done before, Twenty years ago, 189 countries signed the Beijing Platform for Action, which called ongovernments to strive for gender balance in its leadership positions. Today, six countries have reached the threshold – Canada, France, Finland, Sweden, Lichtenstein and Cape Verde.

If national governments can meet such an objective, Silicon Valley can. Boards can be the catalysts for this change. How?

Acknowledge the Maverick Rule to address the “pipeline” argument.

In the movie “Top Gun,” Tom Cruise’s Maverick always had to do it “better and cleaner than the other guy” because he felt his family name gave him a disadvantage in the Navy. Superior performance is also how so many female execs have had to move through the ranks and defeat the boys club. At the SVP, VP and Director levels, the female execs I have worked with have been, for the most part, stronger than their peers. They have had to be. So we should recognize that there is a large pool of mid-to-senior level female execs ready to be called up.

Change the rules.

Companies need to loosen the policies that limit their female executives from participating on external boards. An immense pool of talented female executives currently sits at the VP/SVP/C-level across tech, but, unfortunately, too many companies have restrictive policies on allowing current execs to serve on external boards. My former employer, Salesforce is a great example of this. The company has more than 100 female executives. If they were each on two boards, then another 200 board seats at tech companies could be filled by cloud business experts of the highest caliber. And that’s just from one company.

Expand VC partnerships to impact boards.

VCs should expand their firms by bringing in more female partners, who will broaden their perspectives on investments while also improving the board diversity in their portfolio companies. There is a current trend at many VCs to bring in “operators” as general partners and not just finance professionals. In the short term, firms could also have female execs who are currently operators at other tech companies serve on boards in their seats, perhaps even as venture partners.

Recognize that boards drive change.

Adding qualified, female operators the makeup of boards would also be a catalyst for change in the composition of C-suites, as boards have a significant role in the hiring process at the top echelon. You can also imagine the network effect as boards and VCs think about filling open c-level positions or open partnership opportunities given the exposure provided by these 50/50 boards.

Silicon Valley should make the kind of big bet on women that it makes all the time on technology. Rejecting Silicon Valley’s male culture in favor of diversity and inclusion may be the most important disruption the Valley ever undertakes.

Can we make it happen?

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Andy is Chief Executive Officer of Act-On and oversees the strategic direction of the company. Prior to joining Act-On, Andy held several senior leadership positions at Salesforce, including Chief Operating Officer of the Products Division and Senior Vice President & General Manager of Data.com. In both these roles he helped significantly grow customer adoption of Salesforce products and services.